China factory activity contracts in August - Caixin

Activity in China’s manufacturing sector contracted in August for the first time since April 2020, according to a private gauge released on Wednesday.

The Caixin manufacturing purchasing managers’ index fell to 49.2 from 50.3 in July, coming in below consensus expectations for a reading of 50.1. A reading above 50.0 signals expansion, while a reading below indicates contraction.

The country’s official manufacturing PMI, which was released on Tuesday, showed a drop to 50.1 in August from 50.4 in July.

Caixin senior economist Wang Zhe said: "Both supply and demand in the manufacturing sector shrank as the Covid-19 outbreaks disrupted production.

"Demand for intermediary products and investment goods also dropped, while that for consumer goods was relatively stable. Exports fell amid logistics disruptions and as the pandemic continued overseas."

Julian Evans-Pritchard, senior China economist at Capital Economics, said the Caixin manufacturing PMI adds to signs from the official PMI that industry is coming off the boil.

"The surveys point to worsening supply shortages amid the Delta outbreak. But there are also signs that demand is weakening too," he added.

Freya Beamish, chief Asia economist at Pantheon Macroeconomics, said it’s likely the Caixin gauge was worse than the official PMI because it is more sensitive to exports and a major port was partially closed during the month.